8 LOCATION. 



The factors affecting profits are: 1. Gross earnings. 2. Oper- 

 ating expenses. 3. Fixed charges. The effect on such factors, 

 of differences of route, location details and construction cost 

 must be determined before the final route of least cost and 

 greatest value can be fixed. 



The combined sum of operating expenses and interest 

 charges is least when interest charges on additional expendi- 

 tures are no longer saved in reduced cost of operating ex- 

 penses, and when additional operating expenses are no longer 

 saved, in reduced interest charges. Accordingly, the economic 

 value of each factor affecting the cost of operating must be 

 ascertained and carefully compared with its corresponding 

 effect on construction cost, in order to secure the most eco- 

 nomical ratio between operating expenses and construction 

 cost. 



The principal factors affecting cost of operation, with which 

 the Engineer has to deal, are: Volume of traffic, gradients, 

 distance, rise and fall, curvature and maintenance of railway, 

 for which economic values are elsewhere given under appro- 

 priate heads. 



The sums which may be profitably expended for improving 

 the character of the railway location and construction vary 

 most directly with the number of trains to be operated over 

 the new railway, for which reason the "train mile" is usually 

 adopted as the operating unit. The commercial effectiveness 

 of "operation" is reflected in the average cost of transporta- 

 tion per net ton mile, which may be regarded as the commer- 

 cial unit. 



The least cost of transportation is secured when the lowest 

 train mile cost is combined with the largest net tonnage per 

 train. And the earning power of the invested capital is great- 

 est when least cost and greatest net tonnage per train are com- 

 bined with the lowest economic capital expenditure. 



Under these conditions only does "a dollar earn the most 

 Interest." 



GENERAL, INSTRUCTIONS. 



The rules governing location are intended for use in the 

 field, and it is expected that they will be closely followed. 



